CBA Response to Chairmen Luetkemeyer & Neugebauer TRID Letter


April 28, 2016


The Honorable Blaine Luetkemeyer

Chairman, Housing & Insurance Subcommittee

Committee on Financial Services

U.S. House of Representatives

Washington, DC 20515



The Honorable Randy Neugebauer

Chairman, Financial Institutions and Consumer Credit Subcommittee

Committee on Financial Services

U.S. House of Representatives

Washington, DC 20515



Dear Chairmen Luetkemeyer and Neugebauer:


On behalf of the Consumer Bankers Association (CBA), I would like to express our appreciation for your March 24, 2016 letter highlighting the continued challenges the new TILA-RESPA Integrated Disclosure (TRID) forms pose to the banking industry and consumers.  CBA appreciates your continued interest and oversight of the Consumer Financial Protection Bureau (CFPB) and its implementation of the TRID rules.  CBA is the voice of the retail banking industry whose products and services provide access to credit for consumers and small businesses.  Our members operate in all 50 states, serve more than 150 million Americans, and collectively hold two-thirds of the country’s total depository assets.


On December 31, 2013, the CFPB published its TRID rule, as mandated by the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).  The rule is intended to simplify the complex Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) disclosure processes governing real estate lending by merging the two disclosures – a change that stakeholders have supported to streamline the process and provide simplified disclosures to consumers.  While supportive of the overall goal, lenders urged the CFPB to consider a longer implementation period to accommodate the sweeping system modifications – as such changes affect every mortgage lender, mortgage broker, settlement provider, title company, insurance company, and consumer involved in the mortgage lending process.  The weight of this immense task is compounded by the fact there are only a limited amount of vendors available to implement the changes.


CBA and other stakeholders shared with the CFPB the challenges lenders would face when attempting to comply with the rule in the time frame allotted.  Unfortunately, the CFPB failed to fully appreciate these difficulties and the negative impact a short implementation time would have on consumers, the mortgage market, and the economy by only granting a two month extension at the eleventh hour without resolving many of industry’s concerns.


As a result, financial institutions continue to encounter complications as they work to establish operational systems.  In an effort to meet customer demand, some lenders were forced to use manual overrides, resulting in a slower application process for the consumer and exposing the lender to a greater compliance burden and litigation risk due to the increased likelihood of human error.  We appreciate that Director Cordray has acknowledged the difficulties lenders have encountered throughout this process and has promised to take good faith efforts to comply into consideration during exams; however, lenders remain in the challenging position of satisfying customer needs, while also fulfilling compliance requirements to avoid possible enforcement actions and litigation in the future.


To fully understand the effects TRID has had on the mortgage market, CBA recently surveyed our Board of Directors about their experiences with TRID implementation.  The results were clear – our member institutions continue to be deeply concerned with the costs of implementation, increase in closing time, decrease in customer satisfaction due to delays, elimination or suspension of certain products (home equity loans are a prime example), real and serious threat of enforcement actions, and increase in exposure to civil litigation.  Put simply, industry and stakeholders need reliable guidance from the CFPB indicating they will not be held liable for unavoidable technical errors.


After hearing our members’ concerns, CBA and seven similarly affected trade associations sent a letter to Director Cordray on January 29, 2016 requesting the Bureau publish in the Federal Register the Director’s December 29, 2015 letter to the Mortgage Bankers Association where he outlined the Bureau’s intent on early examination policies and the ability to cure minor errors.  This simple action would serve as helpful guidance moving forward.  To our disappointment, this request was denied by the Bureau.  At the same time, the Bureau promised to move expeditiously on efforts to provide informal guidance where necessary, with the intention of making these interpretations formal at a later date. 


Based on feedback from our membership, included below are just some of the areas where the Bureau could provide more clarity:


1.Errors and Cures

The CFPB should allow for a process where lenders can correct clerical errors that occur during the process of helping a borrower obtain a loan.  Allowing banks to correct, or “cure”, these errors would provide needed clarity for investors and due diligence firms relieving much of the stress on the credit markets due to liability concerns that arise, all without eroding consumer protections.


2.Construction Loans

There is considerable confusion surrounding construction loans and how to document them on the new forms as they were not required to be disclosed on the HUD-1 under RESPA.  These concerns are so great they have forced some lenders to remove construction loans from their product line while others have decided to hold two separate closings instead of a one-time closing, resulting in greater costs to the borrower. 

3.The “Black Hole”

Under the new TRID rule, when a borrower asks for a delay in the closing date due to unforeseen circumstances not caused by the lender, additional charges may result or the borrower may have to start the application process from scratch.  We would ask the CFPB to allow banks to make minor modifications to the closing documents so the additional fees incurred can be captured in the Loan Estimate and to provide for the additional time needed to close the loan.


4.Title Premium

In some markets, title insurance regulations result in the premium calculation for the owner’s title to appear as a negative number.  The TRID rule needs to be clarified to explain how a negative number can be disclosed.


5.Cash to Close

There are a number of loan products that, absent further guidance from the CFPB, cannot be disclosed on the forms, resulting in noncompliance.  This inability to properly disclose is a result of the Cash to Close Table on the TRID form. 


6.Second Lien Loans

There is very little guidance on how to prepare disclosures where a second-lien is in existence.  Lenders should be provided more clarity on how to identify second-liens on the TRID forms.

Guaranteeing the continued availability of mortgage credit to our customers is of the highest importance to our members.  We continue to encourage the CFPB to issue written guidance that will provide clarity to lenders and certainty to the mortgage market.  CBA welcomes the opportunity to work with Congress and the CFPB to craft a regulatory framework that promotes responsible mortgage lending and provides protections to the American consumer. 



Richard Hunt

President and CEO

Consumer Bankers Association